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June 21, 2011

Nokia Sends Mixed Messages About Future Products

by Sam Savage

Nokia is planning to introduce mobile phones featuring the Microsoft Windows operating system this year, but is facing steep competition in the smartphone marketplace, reports the Associated Press (AP).

Nokia faces strong products from the king of the smartphone hill, Apple's iPhone, Research in Motion's Blackberry line of products as well as Android choices. Less expensive products that maintain strong features are always clawing up the market hill squeezing the middle ground of the smartphone market.

CEO Stephen Elop said in a speech at the CommunicAsia 2011 industry technology trade show in Singapore that Nokia will start to deliver the Windows-based mobile phones in bulk next year.

"Our primary smartphone strategy is to focus on the Windows phone," Elop said. "I have increased confidence that we will launch our first device based on the Windows platform later this year and we will ship our product in volume in 2012."

Elop has acknowledged that the Finnish handset maker has been slow meeting the challenge from competitors and has hinted that the company would drop its cellphone prices. The company announced last month that sales and profit margins in the second quarter would be substantially below previous forecasts.

In February of this year, Nokia announced it would adopt Microsoft's Windows Phone 7 (WP7) operating system for its future smartphones, AFP reports. Nokia has seen its global market share dwindle after other companies came up with sleeker mobile phones offering an immense range of games, business software, mapping features and thousands of other applications.

Overall, Nokia handsets accounted for at least 8 out of every 10 phones sold in Asia at one point, according to the CommunicAsia program but analysts said it faces an uphill task to stay in the lead.

Nomura Equity Research has forecast that Nokia's share of the entire mobile phone market will decline from 25.1 percent in the first quarter this year to 19.9 percent in the fourth quarter. In the smartphone sector, the decline is steeper, from 25.5 percent in the first quarter to 13.1 percent in the fourth quarter ending Nokia's 14-year streak as world number one handset maker.

At the trade show, Elop reiterated that Nokia would be offering hardware operating on Microsoft's Windows platform later this year. Puzzlingly, Nokia showed off its new all-screen N9 smartphone, which uses a platform called MeeGo.

The still-unreleased MeeGo platform was born in February 2010 when Nokia and Intel unveiled a merger of Nokia's Linux Maemo software platform with Intel's Moblin, which is also based on Linux open-source software.

MeeGo, which can be navigated by a single finger swipe had been developed in-house but is being replaced by WP7, Reuters reports. "It seems pointless to launch a phone like the N9 on a platform that has been cut by management," RBS analyst Didier Scemama said in a research note.

Elop said the N9 was part of Nokia's drive to introduce, "an exciting experience around the user interface, the industrial design and the developer platform".

"Our primary smartphone strategy is to focus on the Windows phone," said Elop, who moved to Nokia from Microsoft last year. "I have increased confidence that we will launch our first device based on the Windows platform later this year and we will ship our product in volume in 2012."

Attendees at the trade show had mixed reactions to the Nokia chief's upbeat statements.

Marcus Tan, Asia-Pacific managing director of mobile advertising firm Smaato visited Nokia's booth and declared, "Nokia will survive but probably in a different style, a different way. They will evolve."

"With the influx of tablets and iPads or iPhones, I think the market will evolve and Nokia will be one of the leading players in the industry."

But Singaporean technological blogger Lester Chan was not as optimistic. "As a phone, I would say that Samsung, definitely, Blackberry, iPhone will overtake Nokia, it's just a matter of time," he told AFP, adding that the leadership change would happen in "two, three years' time."